The Affordable Care Act is Working Pretty Well

The Affordable Care Act is Working Pretty Well December 8, 2014

I signed up for a new insurance plan through healthcare.gov (Michigan’s Republican-controlled legislature refused to create a state health care exchange, so I’m on the federal exchange). The one I had this year is still available, but slightly more expensive, but I changed companies to a new one that wasn’t part of the exchange last year and got a slightly better deal for about the same price I paid this year. And apparently I’m not alone.

Obama administration officials announced on Thursday that health care premiums for policies available through the Affordable Care Act will increase slightly on average in 2015, growing at a far slower rate than they did before President Barack Obama signed reform into law in 2010.

Premiums will decrease, on average, in at least 14 of the 35 states where the federal government has established a health care exchange. In the remaining 21 states, premiums will fluctuate between a two percent increase in Utah and Wisconsin to a 28 percent spike in Alaska. On average, the report concludesthat premiums for the second-lowest cost policy will rise “by 2 percent on average this year before tax credits, while premiums for the lowest-cost silver plan will increase on average by 5 percent.”

Prior to reform, an analysis conducted for the Commonwealth Fund, found that on average, premiums in the individual and small group markets rose by more than 10 percent annually.

The 26-page report also notes that more than 25 percent more insurers are participating in the exchanges in 2015, meaning that “91 percent of consumers will be able to choose from 3 or more issuers—up from 74 percent in 2014.” The administration is encouraging enrollees who had signed up for coverage in 2014 to shop around this year, noting that the plans offering the lowest prices may have changed as new issuers enter the market and compete for customers. Approximately two-thirds of existing customers will be able to find coverage for $100 a month or less.

All of this is important. The fact that more companies are joining the exchanges, including the one that I’ll be with after the 1st, is a clear indication that this has actually been good for insurance companies despite having lower numbers of young and healthy people signing up than hoped for. Having more companies in the market means more competition and helps reduce the cost of insurance. This is also important:

On Wednesday, the Centers for Medicare and Medicaid Services reported that health inflation in 2013 fell to the lowest level since the federal government began keeping track of the statistic.

This is the cost of health care in general, not health insurance. The rate of inflation in health care costs has been staggeringly high year after year, rivaling the cost of college tuition, despite overall inflation being low. That health care costs only grew 3.4% in the first year of the ACA is a good sign that reducing the number of uninsured helps bring costs down because doctors and hospitals don’t have to overcharge those with insurance to make up for those without it.

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